YELP’s CEO has responded to the lawsuit with his blog post. It does provide YELP’s perspective and emphasizes that the quality and fairness of the reviews is how they’ve built a large user base. Jeopardizing the integrity of that, he states, would negatively impact the company.

While that may be right, or may have been right before gaining 29 million users, he doesn’t address anything at all about their income and business model, other than referencing “no businesses that advertise on YELP have a perfect reputation”.

But, isn’t that where the issues lies? I suspect those businesses didn’t start off advertising when there were few users and great reviews. I believe the majority of those businesses advertised to get a more favorable review up top above a negative review…that seems to have only occurred after turning down an Ad deal from a YELP sales person.

Of course, I’m only speculating based on the range of multi-page articles I’ve read, several by investigative reporters. I could, of course, be as wrong as the YELP CEO contends all of these reports are wrong.

Why is this important to small businesses? The tool he used to figure out what occurred was simply Google’s Webmaster Tools. It’s a free toolbox that Google provides ‘authorized’ webmasters to use on their sites. It’s one of the very first things I setup for my clients…and NONE of my clients, include Web Design Firms and Fortune 500 companies were previously authorized to view that information. (Yes, my head is shaking sadly.) It’s not really their fault (most of them anyway), as business owners can’t know every detail from tax laws to accounting to marketing to sales. BUT, this is becoming more and more important, so my recommendation is to hire a small business marketing professional in the same light as their accountant. Someone they can ask for a quick review and recommendation, some occasional help and periodic conversations on at least a bi-annual basis.

Back to our story… Jason Morrison has several sites hosted with his hosting company. His blog began disappearing from Google search pages and he investigated why. After using Google’s Webmaster Tools he found they had stopped crawling due to tons of crawl errors:

Jason's site's Crawl Statistics from Google Webmaster Tools

Simple answer to the problem? He had allocated a certain chunk of his overall monthly bandwidth to his blog…and his readership has grown beyond that limit, so the hosting company drops traffic…which INCLUDED Google’s index bot. Thus, Google thought he had shut down the site and began removing pages from their search results.

My first question? How long would it have taken you to realize YOUR site’s traffic had disappeared from Google’s index? Do you check enough of your site periodically against search engines? Do you check your webmaster tools accounts at least once a month?

To me, and many others, the App Store is that moat. While the others might catch up one day, Apple has over 200,000 applications (compared to maybe 20,000 Android ones?), which have been downloaded 3 billion times and I’m guessing generated over a billion dollars of pure profit for Apple. Recent reports have Apple capturing over 99% of smartphone application downloads which is estimated to have generated over $4 billion in revenue…of which Apple gets to keep 30%. (For those that don’t know…THIS is the real reason why Apple refuses to allow Flash to run on iPhones, iPods and the iPad…Flash would allow websites to sell and deliver applications straight from the web and avoid the App store, along with Apple’s cut.

So, Apple is sitting behind their castle walls, looking at the angry hordes on the other side of their moat and they decide to tell they front line troops that only the King gets medals and riches.

What am I talking about? Apple provided a Tip on their developer’s blog two days ago which talks about using their core Location Based Services API, so an application can determine ‘where’ it is being run. Why? So that the application can provide additional information, or targeted information at that very moment. Many, many marketing people, like myself, recognize how effectively local mobile Ads can pull someone past one door and into another if done right at ‘point of inquiry’.

Apparently, Apple recognizes this as well. Their tip either cautions or reminds developers, however, that they are NOT allowed to advertise within their own application. Apple believes that real estate belongs to Apple, not to the developer:

Only time will tell about this decision, but I feel Apple just took a significant revenue opportunity away from developers. I don’t see them turning around and providing Apple any real estate WITHIN their application (while it’s running) for a location-based ad where the developer won’t benefit. Instead, they’ll advertise their other product lines or typical impression ads that aren’t triggered by location. I think that means Apple, their developers and us end-users ALL LOSE…it’s a lose-lose-lose proposition.

Does anyone else see that leak in the moat? Maybe Apple has some iGum or an iFinger they could use to plug it? Oh wait, Apple has already been using their iFinger application and it’s just been squarely pointed at their own developer’s community. 😉